On Tuesday, Jefferies updated its outlook on Healius Limited (HLS:AU) (OTC: PHCRF), increasing the price target to AUD1.30 from AUD1.18, while continuing to recommend an Underperform rating on the stock. This adjustment follows Healius's recent downgrade of its FY24E EBIT guidance due to lower-than-expected average pathology fees.
Healius has set its new EBIT guidance for FY24E in the range of A$60 million to A$65 million. Jefferies now anticipates Healius's FY24E EBIT to be around A$62 million. The revised guidance suggests an expected base pathology EBIT margin of 4.6% for the second half of FY24E. The firm also forecasts that this margin will persist into FY25E.
The concern for Healius lies in its inability to leverage decent volume growth projected for the second half of FY24E. Jefferies expresses worry that this trend might continue into the medium term, affecting the company's financial performance.
Healius's updated financial outlook and Jefferies's revised price target reflect the challenges the company faces in translating volume growth into improved earnings. The market will continue to observe how Healius manages these dynamics in the upcoming financial periods.
InvestingPro Insights
As Healius Limited (HLS:AU) navigates its financial forecast amidst volume growth and earnings challenges, several metrics from InvestingPro provide additional context to the company's current market position. Notably, Healius has been trading at a high Price/Earnings (P/E) Ratio, with the latest data showing a P/E Ratio (Adjusted) of 135.36 as of the last twelve months ending in Q2 2024. This suggests a market expectation of high future earnings growth compared to the current level of earnings.
Moreover, the company's Price/Book ratio stands at 1.52, indicating that the stock may be reasonably valued in terms of its assets. However, the InvestingPro Tips highlight a concern: Healius's short-term obligations exceed its liquid assets, which could signal liquidity challenges ahead. Additionally, analysts do not expect the company to be profitable this year, as reflected by the absence of Basic and Diluted EPS figures for the same period.
Despite these challenges, Healius has demonstrated strong returns over the last three months, with a price total return of 20.59%. It's worth noting that Healius does not pay dividends to shareholders, which may affect the investment appeal for income-focused investors. For those considering an investment in Healius, there are many more InvestingPro Tips available that can provide deeper insights into the company's performance and potential. Interested readers can unlock the full range of tips with an additional 10% off a yearly or biyearly Pro and Pro+ subscription using the coupon code PRONEWS24.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.